MuniFin plans to issue EUR 8.2 billion long-term funding in 2020

In 2020 MuniFin forecasts to issue approximately EUR 8.2 billion of long-term funding. The amount is slightly larger compared to 2019 – mainly due to the redemption profile. Focus on strategic currencies, in both EUR and USD, will continue. The plan is to issue approximately 2/3 of the funding through strategic trades and the rest 1/3 through tactical funding: other public markets, private placements and structured retail notes. This is also in line with 2019 allocation.

MuniFin is also planning to increase its presence in theme bond markets. Framework for Social bonds with the related Second Party Opinion will be released within few weeks’ time with the aim to issue the inaugural Social bond during H2/2020. In addition, a new benchmark sized Green bond is planned for 2020. Timing for this transaction will depend on the underlying green asset portfolio.

2019 has been successful in terms of new funding: EUR 7.4 billion has been issued by the end of the year. Out of this almost 65% has been issued in strategic public markets. MuniFin has issued two EUR benchmark transactions (5y and Green in 10 years), two USD fixed rate benchmarks (3 and 5y) and has tapped existing EUR benchmarks two times in 2019.

Top 4 currencies in 2019 have been EUR (35%), USD (29%), JPY (17%) and NOK (14%). These currencies account for more than 95% of the new funding issued in 2019.

Behind the scenes: a young entrepreneur Eerika shadowed MuniFin’s CEO Esa Kallio for a day

What was on today’s agenda?

“We had several meetings with people trying to sell something to Esa. MuniFin’s team in the negotiations always consisted of Esa and one other person, depending on the topic. We also attended a board meeting of MuniFin’s subsidiary Inspira, which focused on the company’s strategy and next year’s action plan”, Eerika says.

“I have had such an exciting day. MuniFin works with really important issues. I was expecting the place to be boring – and quiet. A lot of the staff are older, but they have young minds. The organisation clearly wants to stay competitive. The finance industry intrigues me because I like numbers. The experience has left me feeling that I want to learn more about this business.”

“It is extremely refreshing to talk to someone young and see your own work through someone else’s eyes”, Esa says.

Eerika wants Esa’s advice on which career path to follow in the future.

“You have a natural curiosity, and you are clearly adventurous. I think you would enjoy a job that involves interacting with people. You have a healthy self-esteem, and you are not afraid to put yourself on the line and always reach for the next step up the ladder”, Esa says.

A thriving café business back home

Eerika runs a live music café called Kukkakievari in Varkaus, which she renovated with her sisters.

Eerika and her 16-year-old sister Eliina run a live music café called Kukkakievari in Varkaus, which also employs their younger sister Meeri.

How did you come up with the idea of opening a café?

“Owning a live music restaurant has been my dream for a long time. I have been taking piano lessons for 11 years, and my sisters and I also perform in the café.”

However, it was Eerika’s neighbours who actually got the ball rolling. They wanted to do something useful with an empty outbuilding that they had on their property and suggested that Eerika and her sisters open a business there.

“I spent almost nine months in North America last year, because I wanted to get better at English. I was in Canada when my mother called me and asked whether I would like to run a café in the neighbours’ outbuilding with my sisters. We get on well with our neighbours, and they knew that we would probably like the idea.”

So how is business?

“Business is great. You can earn up to EUR 10,000 in the JA Company Programme, and we reached that limit after just three weeks. It was at that point that I decided to register as a sole trader.”

Eerika and her sisters advertised their business through the media.

“I tipped off our regional and local newspapers, and four of them sent reporters over to write an article about us. When they realised what it was that we were doing, they were fascinated. Facebook and Instagram have also been important in spreading the word.” 

Heart set on entrepreneurship and management

“Eliina and I are both back at school now and taking a break from the café. We do not want our customers to forget about us, which is why we are thinking about hosting a Christmas event of some kind, maybe a concert. Our plan is to reopen the café again properly in the spring and work first at weekends and then every day except Mondays for the summer holidays”, Eerika says.

Despite the undeniable success of their concept, Eerika and her sisters have their sights set on bigger and better things. They want to either expand the café or turn it into a catering business or a B&B.

“I have a meeting with a local restaurateur next week, whose advice and experience I hope will help me. I used to think that I did not know enough, but participating in the JA Company Programme has made me realise that you can always ask for help”, Eerika says.

Eerika and her sisters found out about the JA Company Programme through their local Enterprise Agency. The programme has taught them a lot about business planning and bureaucracy in particular. It has also given them many new opportunities, such as Eerika’s chance to take part in the Job Shadow campaign.

“I want to work in management, which is why I intend to go to university. I am currently leaning towards studying economics, because it is such a versatile subject. I like working with people. One day, I would like to be a human resources manager.”

MuniFin and JA Finland in a close partnership

“Eerika is an outspoken and enterprising young woman. If just 15% of Finnish teenagers were like her, our future and competitiveness would be guaranteed”, Esa Kallio says.

Encouraging entrepreneurship and preventing social exclusion among young people are crucial for the future success of Finland’s local authorities. This is why promoting education, familiarising young people with economics and politics early on and fostering entrepreneurial attitudes are at the heart of MuniFin’s corporate citizenship policy.

MuniFin is one of JA Finland’s main partners in 2019 and 2020. Schools can incorporate the JA Company Programme into their lesson plans to give their students knowledge and skills in financial literacy, work readiness and entrepreneurship. MuniFin will also have its own Signature Award category in JA Finland’s 2020 national entrepreneurship competition next spring.

In addition to the partnership with JA Finland, MuniFin is involved in Economy and Youth TAT’s entrepreneurship village project. The project is designed to give schoolchildren in the final year of primary school their first taste of the labour market, economics and political decision-making.

Text and photos: Soili Helminen

Pöytyä invests boldly in education

Considering that it only has a population of just under 8,400 people, Pöytyä’s investments in education are bold: almost EUR 30 million in the space of three or four years. Despite this, the local authority has turned its deficit into a sizeable surplus. How is this possible?

“We plan our investments and choose the ways in which to finance them by looking at the long-term effects on the town’s economy. We have also worked hard to increase the efficiency of our operational economy”, explains the town’s mayor, Anu Helin.

Pöytyä’s school system has been under systematic development since 2015, when the local authority decided to amalgamate the primary and secondary levels of education. This is also the objective of the local authority’s investments. A new comprehensive school in Riihikoski opened in August 2019, and the biggest investment in the local authority’s history – a school in Elisenvaara that combines primary, secondary and upper secondary education and that is estimated to cost between EUR 14 million and EUR 15 million – is due to be completed in 2022. The local authority is financing the project by means of property leasing.

“We started looking into sustainable ways to finance another major school investment last autumn. We researched property leasing carefully in order to make sure that we knew what we were getting into. Experts from MuniFin explained the details to our executive team, the municipal board and the municipal council. Their advice was invaluable. I think it is important that the people in positions of trust in our local authority also understand the financing model”, Helin says.

Experts’ advice on investments

The building that will house the new Elisenvaara School is technologically innovative and features several unconventional solutions. The project involves demolishing most of the old schoolhouse that currently sits on the property but keeping the old library. The pupils will also continue to use the old school canteen until the new building is completed.

The local authority planned the project in close cooperation with MuniFin and technical consultants in order to ensure a smooth transition and the new school’s eligibility for property leasing.

“Leasing gives us time, as we will not have to start making payments until after the building is finished. On the other hand, we are currently paying almost as much rent on the temporary school building as what our leasing payments will be once the new school is ready.”

In addition to advising the local authority on the Elisenvaara School project, MuniFin’s experts have contributed to Pöytyä’s long-term economic plans. The local authority has also hired external financial market advisors and legal experts to ensure the success of its more ambitious and complex investments.

“A local authority as small as Pöytyä has to, and should, rely on external experts. It is not worth us paying the price for lack of knowledge and poor planning on investments of this magnitude”, Helin explains.

“The investments in schools and our school system are part of our development programme, which we are calling our journey into the future.”

“We believe that a high standard of local services and state-of-the-art schools will help us to keep our residents here and make the town more vibrant. It has been great to see the opportunities that modern, safe, high-quality learning environments have already opened up for our schools”, Helin says.

Text: Hannele Borra
Photo: Pasi Määttälä

Proud to be local

The company’s brand and products have become part of the small town’s identity, and the business has created jobs, brought tourists and boosted the confidence of the local community.

Miko Heinilä, Kyrö Distillery Company’s Distillery Manager, has told the story so many times that he even remembers the exact date when it all started: 10 May 2012.

It was on that day that a group of friends gathered in a sauna at a rented cottage in Karjalohja and Miika Lipiäinen, who later became the CEO of Kyrö Distillery Company, suggested a whisky tasting. The men were blown away by one particular specimen – a rye whisky – and wondered aloud why no-one makes rye whisky in Finland.

“I told the others that I grew up on a farm and know how much a tonne of rye costs. I even had the perfect place in mind for a distillery”, Heinilä says.

That place was Heinilä’s hometown, Isokyrö, between Vaasa and Seinäjoki. Initially, starting a distillery in a local authority of just 4,600 people in the remote region of Ostrobothnia was just a crazy idea. It was particularly outlandish because, with the exception of Heinilä, all the others lived 250 miles away in and around Helsinki.

However, the group soon learned that Isokyrö’s old dairy, which is known for being the original home of Oltermanni cheese, could be turned into a distillery. Heinilä invited the others over and told them about Isokyrö’s history.

The men knew that many distilleries and especially those in Scotland, the world’s best known exporter of whisky, are hundreds of years old. Their whiskies already had history and a unique story. Kyrö Distillery Company had nothing except for an outlandish idea conceived in a sauna, but the history of Isokyrö had everything from mysterious human bones found in a well in Leväluhta to the Battle of Napue, the last battle of the Great Northern War.

Suddenly the idea no longer seemed that crazy.

“We can tell the history of Isokyrö and use that as a foundation for building more history”, Heinilä says.

“In a way, we are part of a bigger story.”

There was only one problem: it takes at least three years for whisky to mature in Europe. This was bad news for cashflow, and the men had to think of something else in the meantime.

Could they make gin from Finnish rye and herbs? It was worth a try.

Investing in training

Heinilä admits that the distillery’s remote location was a concern.

“Helsinki is the birthplace of most trends in Finland, and we are located physically far away from there. We were setting up a visitor centre and at the same time wondering whether anyone would actually ever visit.”

They need not have worried: both the distillery’s reputation and demand for its products shot up overnight when a gin and tonic made with Kyrö Distillery Company’s Napue Gin won first prize in the International Wine and Spirit Competition in 2015, just one year after it first went into production.

According to Heinilä, the distillery’s visitor centre, named the Kyrö Tourism Board, attracted a total of 14,000 tourists last year, more than three times the population of Isokyrö. Kyrö Distillery Company has even begun to host its own festival, Kyröfest, which takes place every year in August. The company is on a mission to make its visitor centre the most prestigious tourist destination in Finland by 2022.

The company’s main objective – making Kyrö Distillery Company the best known rye distillery in the world – has the same deadline. In practice, achieving the goal requires considerable investment in growth: the new distillery that the company has been building this year will raise its annual capacity up to 500,000 litres.

Kyrö Distillery Company employs a total of around fifty people, of whom 10 work in the company’s offices in Helsinki. According to Heinilä, having a presence in two places makes recruitment easier, but the company also puts a lot of emphasis on training its distillery workers in Isokyrö.

“I think that we have only ever hired one person who had previous experience of working in a distillery. Our priority is finding great people to join the team”, he says.

“With the right attitude and personality, anything can be learned.”

“We cannot do this alone”

Heinilä is also the chairman of the municipal council of Isokyrö, which made his new project a big talking point in the town. The fact that the company’s official name is Rye Rye Oy – which is homonymous with a Finnish phrase for drunken frolicking – and the fact that Isokyrö has a history in producing moonshine added fuel to the rumour mill.

“The chairman of the municipal council being a bootlegger was naturally a juicy story”, Heinilä says.

The locals nevertheless soon warmed to the distillery. Heinilä has endless praise for the community’s team spirit, support and open-mindedness. He also sees Isokyrö’s location between the biggest towns in Ostrobothnia and South Ostrobothnia as a major selling point. There is even an airport in Vaasa.

Isokyrö is firmly intertwined with the brand of Kyrö Distillery Company. For Heinilä, the town will always be the company’s home: there are no plans to relocate let alone sell the business.

Kyrö Distillery Company currently exports its products to a total of 33 countries. Heinilä explains that global competition in the industry is fierce. The fact that the company has a whole town standing behind it and feeling proud about the association is a huge asset.

“This is not an endeavour of five men or even a team of 50 workers. To succeed, we need everyone’s support. We cannot do this alone.”

Heinilä’s tip for aspiring entrepreneurs in other small towns is to think about the strengths of the area they come from and look for links between their idea and the region. Heinilä’s favourite kind of feedback is people telling him that the success of his crazy idea in a place like Isokyrö has inspired them to try something similar where they live.

“I cannot think of a greater achievement for a group of guys than to give someone the courage to follow their dream.”

Small and nimble

It is hardly an overstatement to say that Kyrö Distillery Company has put Isokyrö on the world map. The distillery has been featured on the BBC and in Monocle magazine, and a journalist from VICE visited the town and wrote a piece about the frozen Kyrönjoki river.

Tero Kankaanpää, Mayor of Isokyrö, is used to talk quickly turning to the distillery wherever he goes in Finland.

“The town has become famous thanks to Kyrö Distillery Company”, he says.

According to Kankaanpää, the number of tourists in Isokyrö’s traditional attractions, such as its medieval church, has also increased.

The local authority has supported Kyrö Distillery Company as best it can. Most importantly, the local authority has rezoned the town and sold more land to the growing business. The small size of the town is a benefit in this respect: it makes the local authority nimble.

“One of our strategic promises is to grant planning permission within two weeks of receiving the papers, and we have always kept that promise”, Kankaanpää says.

Kyrö Distillery Company has also applied for and been given permission to build a biogas fuelling and distribution station in the town. The company intends to use biogas to fuel its steam generator, but the station will also benefit anyone driving a biogas-powered car in the future.

“The company is therefore also bringing new services to the town”, Kankaanpää explains.

As much as Isokyrö has added to Kyrö Distillery Company’s brand, the company has also benefited the town. Its story is perfect for Isokyrö, which has made a strategic choice to promote entrepreneurship from primary school onwards.

“Businesses are imperative for the vitality of small local authorities. The competition over residents these days is bordering on silly, and to attract more people, local authorities first need to have jobs.”

Isokyrö is building its profile on the town’s team spirit and positive “craziness”. The local authority has even brought out a rear windscreen sticker that reads “You don’t have to be crazy to come to Isokyrö, but it certainly helps”.

According to Kankaanpää, local residents are embracing their reputation.

“I would definitely say that the average person from Isokyrö now has a more positive view of their hometown and its achievements, and a lot of that is thanks to Kyrö Distillery Company”, Kankaanpää says.

“People are now proud to call Isokyrö their home.”

Text: Kaisa Saario
Photos: Samuli Salo

A Call for Mayors: Finnish cities are inviting their global counterparts to take climate action

In these videos the mayors Jan Vapaavuori of Helsinki, Pekka Timonen of Lahti and Marita Toikka of Kouvola describe the climate actions their cities are taking to fight climate change. They aim to encourage cities worldwide to take practical steps towards low carbon society – each step is important, and it is crucial that every city starts taking them right now.

The videos coincide with Finland’s Presidency of the Council of the EU in the latter half of 2019 and the UN Climate Action Summit in New York City.

MuniFin joins Climate Bonds Initiative Partners Program

MuniFin launched green financing for environmental investments in 2016 and issued its first green bond the same year. Since then the company has issued two more publicly traded green bonds and arranged one green private placement. The green project portfolio has reached over EUR 1.2 billion.

MuniFin has taken an active role in promoting more ambitious climate action among its customers. The company offers a margin discount for green projects, which is still globally a rare feature among green financing products.

“We need to dramatically scale up investments to counter climate change, at a global, regional, national and community level. MuniFin acts as a cost-efficient vehicle to channel global funds into Finland’s climate transition, playing a key role in the financing of climate mitigation and adaption projects in municipalities”, says Manuel Adamini, Head of Investor Engagement at Climate Bonds Initiative.

“Raising awareness of the need of green investments and helping our customers to find working examples of realised green investments is one of our aims. We believe that Climate Bonds Initiative will significantly help us reaching this goal”, says Esa Kallio, President and CEO of MuniFin.   

Climate Bonds Initiative undertakes advocacy and outreach to inform and stimulate the market, provides policy models and government advice, market data and analysis, and administers an international Standard & Certification Scheme for best practice in green bonds issuance.

“The Climate Bonds Initiative is delighted to join forces with MuniFin, a green bonds pioneer, to further strengthen climate action in Finland”, Mr. Adamini says.

Banks, institutional investors, private and non-governmental organizations (NGOs) and governments are eligible to join as Climate Bond Partners to help grow a market of green and climate bonds. Partners support investor and stakeholder outreach and education projects centred on growing robust and­­­ sustainable green bond markets that contribute to climate action and low carbon investment. Partners assist in developing initiatives to grow investment in climate finance solutions, participate in different market development committees & help define policy agendas for sector, country & sub-national green bond development programs. A list of Partners is available here.

MuniFin’s latest USD benchmark gathered the company’s largest ever orderbook

MuniFin took advantage of the earliest available window following the US holiday on Monday 2nd September to announce the mandate of their second USD benchmark transaction of 2019. This 3yr benchmark follows MuniFin’s successful 5yr transaction in March and is their largest USD benchmark issue since 2013. Following the volatile summer period, MuniFin were able to deftly identify an open issuance window amidst a highly anticipated SSA pipeline. Despite the recent market volatility, the ability of MuniFin to move 3 basis points from IPTs is an achievement no other SSA peers have managed since January.

The transaction was announced to the market at 11.15am London time on Tuesday 3rd September 2019, with investors invited to reflect Indications of Interest (IOIs) for a USD benchmark transaction. Initial Price Thoughts – IPTs – of MS+18bps area were released in tandem, representing a marginal new issue concession to fair value.

The investor response throughout the European afternoon and overnight US sessions was noteworthy, with IOIs exceeding USD 1.9bn by the London open on Wednesday 4th September. Due to the quality of the order book, price guidance was revised by 1bp to MS+17bps area. Momentum and investor interest continued to build throughout the London morning, and less than one hour later, investor orders had reached in excess of USD 2.9bn. A deal size of USD 1.25bn was communicated to the market at this time and guidance revised further to MS+16bps area. Investor demand continued to grow, and by the time global books were closed the order book had peaked in excess of USD 3.25bn. This allowed MuniFin to set the spread at MS+15bps, 3bps tighter than IPT.

The bond priced with a final spread to the 3yr US Treasury of 10.05bps which represents the tightest UST spread for a MuniFin USD bond ever, as well as the tightest spread for an agency name in the SSA space post-summer.

Despite this, the demand from the Official Institution and Central Bank community was significant at 67%. In terms of geographical distribution, the bond was evenly distributed across EMEA, Americas and Asian-based investors alike.

MuniFin has funding requirements of EUR7.1bn for 2019 and after this transaction have completed EUR 5.5bn of their funding for the year.

Comments on the transaction:

“Huge congratulations to the Munifin team for a remarkable transaction! Despite market volatility, Munifin was nimble out of the summer period coming to market with its latest 3-year USD benchmark, delivering a huge success to boot. This is a fitting way to celebrate Munifin’s 30th anniversary this year with such a fantastic result.”
Lee Cumbes, Head of Public Sector EMEA, Barclays

“MuniFin have executed another excellent USD transaction, their largest since 2013 despite the backdrop of an extremely busy supply window in the SSA space. This transaction was further proof of the support MuniFin receive from the Official Institution community globally which allowed them to be one of few issuers who has moved 3bp from IPTs in 2019.”
Robert Matthews, SSA DCM, BNP Paribas

“A brilliant result for MuniFin. An oversubscribed, high quality orderbook with over 60% from Central Banks / Official institution allowed a 3bps spread tightening through book-build – the first time for an SSA since January. This is a testament to the MuniFin name and ability to take advantage of market conditions.”
Matthieu Batard, Head of SSA Syndicate, J.P. Morgan

“Arguably MuniFin’s most successful transaction ever with their largest orderbook, tightest spread to US Treasuries and a 3 basis point move from IPTs in this volatile backdrop. This is an incredible achievement for the MuniFin team and we congratulate them on the flawless execution of their transaction.”
Ally Goddard, SSA DCM, TD Securities

IssuerMunicipality Finance Plc (“MuniFin”)
RatingAa1/AA+ (all stable)
Issue sizeUSD 1.25 billion
Settlement date12 September 2019 (T+6)
Maturity date12 September 2022
Coupon1.375% payable semi-annually
Re-offer price99.728%
Re-offer yield1.468%
Re-offer vs benchmarkT 1.500% 08/15/22 + 10.05bps
Re-offer vs mid-swaps+15bps
Lead managersBarclays, BNP Paribas, J.P. Morgan, TD Securities
Co-lead managersMitsubishi UFJ, Morgan Stanley, SMBC Nikko, Tokai Tokyo Securities

Further information:

Joakim Holmström, Executive Vice President, Capital Markets,
tel. +358 9 6803 5674
Antti Kontio, Vice President, Head of Funding, Capital Markets,
tel. +358 9 6803 5634 

A school, library, music institute and adult education centre – the new Tohmajärvi Centre of Education offers it all

A municipality of 4,500 inhabitants, Tohmajärvi has recently begun the largest project in its history. From the beginning of 2021, the Tohmajärvi Centre of Education will offer schooling from preschool to general upper secondary school and leisure activities in its library, music institute and adult education centre.

Located close to the Russian border between Kitee and Joensuu, Tohmajärvi has started the largest project in its history this spring: the building complex under construction in the centre of Tohmajärvi will bring all the municipality’s educational services under one roof.

When complete, the Centre of Education will have close to 5,500 square metres of floor space and is designed to meet the needs of 350 students. The idea of combining cultural and educational services arose from a problem that, sadly, many municipalities are familiar with: its school buildings, which were built in the 60s and 70s, are reaching the end of their useful life.

“We knew that decisions about renovating the current school centre would have to be made within the next five years. We decided to deal with the problems at one stroke,” says Tohmajärvi municipality’s Director of Finance and Administration Vesa Karhapää.

The colossal contract is implemented with flexible real-estate leasing

At a cost of more than EUR 11 million, the contract is a huge project for a municipality the size of Tohmajärvi. The size of the project set its own challenges: financing the new Centre of Education with a traditional balance sheet loan would have exerted a considerable burden on the municipality’s self-sufficiency. That is why alternative solutions were sought from the outset.

“To our surprise, only one commercial bank was able to provide real-estate leasing as a financial solution for the project. The solution offered by Municipality Finance was so much more affordable that there was no question of acquiring funding from anywhere else,” says Karhapää.

Mika Korhonen, the Account Manager at MuniFin responsible for the project, says that flexible real-estate leasing is growing more and more popular year by year.

“We have been offering real-estate leasing for seven years, and there is no end in sight to its growing demand. This form of funding is particularly popular in small and medium-sized municipalities. The building of a school is a typical real-estate leasing project,” says Korhonen.

According to Korhonen, the contract period for real-estate leasing is adapted as far as possible to the buildings’ depreciation periods in the municipality. A typical lease period is 20 years, after which the municipality can either redeem the building at a price equivalent to its actual residual value, continue the leasing contract or resell the building.

The right partner can bring savings of millions

On the basis of the preliminary financing negotiations, it was clear that the project would exceed the EU-wide public procurement threshold set by the European Commission. This meant additional requirements for the project that, due to its size alone, would stretch the capabilities of the small municipality to the utmost.

To support the tendering process, MuniFin offered the municipality the services of its subsidiary Inspira. Inspira’s team of ten specialises in planning and implementing municipal and city investment projects and restructuring arrangements.

According to Ville Riihinen, the Inspira Director in charge of the project, utilising an expert partner can save a municipality a lot of money.

“In all our projects, we take advantage of the know-how we have gained over the years and our existing network of experts. At this very moment, we are running six major tendering processes for investment projects, involving more than ten buildings and totalling more than EUR 100 million in investment costs. Small municipalities, in particular, simply don’t have the experience for dealing with such processes. In major projects, choosing the right expert partner can save the municipality millions,” Riihinen sums up.

Partnering with Inspira in the Tohmajärvi contract are Ramboll, which is as an expert on technical matters, and the law firm Krogerus, an expert on legal matters.

“The partnerships were an excellent suggestion by Inspira. All three have such extensive experience in their own specialisms that they were able to provide us with ready-made templates for best practices and advice on what pitfalls to watch out for. Without such skilled partners we would have been in deep trouble,” Karhapää smiles.

The tendering process for the project was carried out through the negotiated procedure. During the eight-month process, various construction companies worked on their own plans in accordance with the guidelines and planning guidance provided by the municipality. Various user groups participated in the design of the Centre of Education, such as teachers, students and real estate maintenance providers.

The new Centre of Education is an investment in the future

In terms of paperwork, the colossal project is coming to an end, but the construction is only just beginning. In May, the work to cast the foundations of the centre began along the stretch of road named after the most famous daughter of Tohmajärvi, the singer Katri Helena.

For a municipality grappling with an ageing population, migration losses and an unbalanced employment structure, the Centre of Education is much more than the sum of its parts. The project is an integral part of a more vibrant Tohmajärvi than ever – and a major investment in its future.

“We hope that the Centre of Education will increase Tohmajärvi’s attractiveness, especially for families with young children. Our goal is to make Tohmajärvi a better home than ever – a place where everyone has the best possible conditions for living a rich, varied life,” Karhapää says.

Text: Roope Huotari

Ambitious targets drive the City of Helsinki’s housing production

Three new buildings for the Helsinki City-owned housing company, Heka, were recently granted Green Financing. The buildings’ E-values represent the best in the industry: for example, the annual efficiency of their heat recovery ventilation is extremely high, between 70% and 79%.

This is not unusual for Heka buildings, as energy efficiency is an important factor in all the company’s construction. As the largest lessor in Finland, Heka’s actions carry considerable weight. The company’s nearly 50,000 dwellings are home to more than 92,000 Helsinki residents. The company orders its new building and renovation projects from the City of Helsinki’s Housing Production Department, which manages the projects in full from design to implementation.

“The City of Helsinki aims to be carbon neutral by 2035. This is a tough goal, and we will have to employ all the measures possible to achieve this,” says Minna Launiainen, HVAC Design Manager at the City of Helsinki’s Housing Production Department.

The three new buildings with Green Financing will be built in the districts of Kulosaari, Myllypuro and Mellunmäki. The energy efficiency class of one of the buildings will be A and the others B.

“These new buildings will have efficient heat recovery ventilation, LED lights both inside and out, and solar panels. Our goal has long been to produce buildings with an energy efficiency class that is above the regulated level and with E-values below 80,” Launiainen says, describing the City’s energy saving measures.

The will is there but more solutions are needed

The City of Helsinki’s Housing Production Department is continuously seeking ways to also reduce the energy consumption of its existing buildings. The thermal insulation capacity of the buildings is improved in connection with façade renovations, the windows are replaced, and the ventilation is replaced with mechanical supply and exhaust ventilation and equipped with heat recovery. Some buildings are also fitted with exhaust air heat pumps, and the heat obtained from them is used in heating domestic water.

Renewable energy is utilised wherever possible.

“We have installed solar panels in some of the existing buildings. We have also investigated utilising geothermal heat, but have not yet succeeded in making it work for one reason or another. In some locations, for example, the reserve in the underground formula prevented the drilling of geothermal holes,” Launiainen explains.

A centralised and remotely controlled building automation system is installed in all new and renovation projects implemented by the City of Helsinki’s Housing Production Department. For example, the indoor temperature of the apartment in addition to the outside temperature is utilised in controlling the heating.

“We are already able to apply a wide range of automatic functions to optimise energy consumption. We will be able to do much more in the future. Adding smart functions is just a matter of programming.”

There is plenty of will to improve energy efficiency, but the solutions are not always easy to find.

“Sometimes the absence or complexity of ready-made solutions prevents the implementation of plans. We need equipment manufacturers to create ready-made concepts and solutions that would be easy to plan and implement even outside renovation projects,” Launiainen says.

Money can also present an obstacle to the most energy-efficient solution, especially if the cost of the renovation verges on that of a new building.

“It’s truly vexing if, for example, heat recovery, which is the most effective way of conserving heating energy, cannot be installed for economic reasons. It’s important to consider life-cycle costs, instead of just investment costs,” Launiainen emphasises.

In its housing production, the City of Helsinki examines life cycle costs more and more also when constructing new buildings.

“We have acquired a tool that allows us to calculate a project’s life cycle costs already at the start of project planning.”

From an expert point of view, what would be the best way to achieve the climate goals in the housing sector?

“There should be a lot more renewable energy in buildings! Of course, producing district heating in a renewable way would be the best solution.”

From individual houses to energy efficient city blocks

A new residential area will be built during the next decade on the north side of the district of Pasila where the former ground transport centre used to be. The area has an environmental theme and energy efficiency targets consistent with it. According to Launiainen, the new areas will be built in one city block at a time. The same block may include rental, right-of-occupancy and owner-occupied dwellings.

“All the buildings in the four city blocks currently being planned will belong to energy efficiency class A, and all will have the Finnish RTS environmental rating. In addition to solar panels, the buildings will include waste water heat recovery, which is a fairly effective way to save on heating costs.

According to Launiainen, it is not heating but water heating in modern, energy-efficient buildings that eats up a large proportion of energy and euros.

“We strive to reduce water consumption by using new technologies and equipment. Our new buildings have apartment-specific water meters, which seems to clearly reduce water consumption.”

Text: Hannele Borra
Photos: Lahdelma & Mahlamäki Architects

The Guardian praises Finland’s measures to tackle homelessness – Kaakinen from Y-Foundation: “Our approach is very pragmatic”

The Guardian explains that in Helsinki hardly anyone has to sleep rough anymore, while in England, for example, the number of rough sleepers has rocketed. The article also explains the background to social housing production in Helsinki.

This is not the first time the British newspaper has written about the Finnish model, the previous time being about a year ago. For its most recent article, the Guardian interviewed, among others, the Y-Foundation’s CEO, Juha Kaakinen, who says that the topic has attracted tremendous interest.

“We receive comments and enquiries about it all the time from all over the world. I have been interviewed, for example, by a radio station in South Africa,” Kaakinen says.

He has toured several countries, presenting the Housing First model, and at the same time learned about the various ways homelessness is fought in different locations.

“The special strength of the Finnish model is our wide-ranging cooperation between the state, municipalities and the organisations involved. While people elsewhere are talking about homelessness, we are taking action. Our approach to it is very pragmatic.”

Positive outlook on the future

Kaakinen also praises the new government programme, one of the aims of which is to halve homelessness during the current parliamentary term and ultimately to eliminate it entirely over the next two terms, that is, by 2027.

“This is a very promising, historic goal. I am optimistic about the programme also because we have experience from the last decade of how to build a model like Housing First and actually implement it collaboratively,” says Kaakinen.

He calls for active measures.

“We have to invest in auxiliary resources. The supply of affordable rental dwellings is a key structural factor in preventing homelessness and, at the same time, the route out of homelessness. From the point of view of housing production for the public good, I also consider it a positive fact that the interest subsidy system is still being developed to make it more attractive. We need affordable alternatives, whether they are rental or owner-occupied dwellings,” Kaakinen says.

Although huge improvements have already been achieved, as shown by the results of the Housing First model, there is still plenty to do in honing the details and deepening the work.

“There is no room for complacency. Even small delays in housing production and supply can translate as problems in the homelessness situation. We have seen clear signs of this in some cities. If the production of affordable housing is neglected, it shows as homelessness at the other end of the chain. We must stay alert constantly.”

According to Kaakinen, Finland needs to learn how to find special solutions for homeless women, among others.

“Fortunately, we have the support of international cooperation and a broad network to draw new ideas from, as well as present new ideas to.”

What does reasonably priced housing production mean?
Reasonably priced housing refers to the state-aided production of rental and right-of-occupancy dwellings by developers who operate on a non-profit-making basis. The rent paid by the tenants consists of the direct expenses incurred in the construction, maintenance and repair of the building. The state supports the construction of affordable housing by providing interest subsidies for the financing of buildings. Interest subsidies may be granted to housing operators and projects which the Housing Finance and Development Centre of Finland (ARA) has defined as a public utility. Municipality Finance Plc is Finland’s largest sponsor of social housing.

Text Pihla Hakala | Photo Sanna Liimatainen